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[LONDON] Oil prices fell on Tuesday ahead of weekly US crude inventory data that is expected to hit another high, withdrawing further from a rally that saw Brent crude futures touch a 4 1/2 month high on Friday.
US commercial crude stockpiles were expected to have risen last week for the 16th straight week, up from a record 489 million barrels, even though drilling activity fell, a preliminary survey by Reuters showed on Monday. "Crude oil has made a strong price recovery on the expectation that you would start to see lower US production and also some strock draws," said Olivier Jakob of Swiss-based consultancy Petromatrix. "We need to have some confirmation of that in the statistics before we can rally further." Brent June crude futures fell 43 cents to US$64.40 a barrel by 0920 GMT. US June crude fell 40 cents to US$56.59 a barrel.
Brent crude hit a 4-1/2 month high of US$65.80 a barrel last week, while West Texas Intermediate (WTI) has risen for six consecutive weeks, underpinned by net long positions on both contracts as speculators bet on a decline in US shale output.
Saudi Arabian Oil Minister Ali al-Naimi said in a speech on Tuesday that he expected Asian oil demand to grow and that Saudi, the world's top oil exporter, would be ready to meet that demand. "Asian demand for oil remains strong and we are ready to supply whatever is required. As the Asian population grows, and as the middle class expands, so the demand for energy will increase," Mr Naimi said in a speech in Beijing.
Conflict in Yemen and Syria and unplanned production outages in the North Sea and Brazil have prompted Barclays to raise its oil price forecast.
The bank raised its Brent forecast by US$9 to US$60 a barrel for 2015 and by US$8 to US$68 in 2016. It also raised its WTI price outlook by US$8 to US$54 a barrel this year and by US$7 to US$64 for 2016.
Still, it warned in a research note that "the oil market is not out of the woods yet and weak fundamentals will weigh on prevailing bullish market sentiment in the second quarter".
Bets on rising Brent crude prices rose for a fifth straight week to a new record, InterContinental Exchange data showed on Monday.